The Department of Housing and Urban Development (HUD) this morning said it expects the Federal Housing Administration's (FHA)reserve fund to stay in the black during the housing downturn unless housing falls into what it called a "deeper recession."
A just released actuarial study, however, predicts the FHA's Mutual Mortgage Insurance Fund (MMI) could have a capital ratio of negative 0.46% under a deeper housing recession scenario. The
FHA predicts the fund will begin to rebuild itself over the next five years reaching a minimum capital ratio of 2.3% by 2014. (The MMI fund is required to have a 2% minimum capital ratio.)
Moreover, the HUD said that unless housing conditions worsen dramatically, the mortgage insurance premiums it charges consumers "are sufficient to pay for claims on new books of business."